Correlation Between Power Finance and Kilitch Drugs

Can any of the company-specific risk be diversified away by investing in both Power Finance and Kilitch Drugs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Power Finance and Kilitch Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Finance and Kilitch Drugs Limited, you can compare the effects of market volatilities on Power Finance and Kilitch Drugs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Power Finance with a short position of Kilitch Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Finance and Kilitch Drugs.

Diversification Opportunities for Power Finance and Kilitch Drugs

0.4

Correlation Coefficient

Power Finance  Kilitch Drugs

Very weak diversification

The 3 months correlation between Power and Kilitch is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Power Finance and Kilitch Drugs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kilitch Drugs Limited and Power Finance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Power Finance are associated (or correlated) with Kilitch Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kilitch Drugs Limited has no effect on the direction of Power Finance i.e., Power Finance and Kilitch Drugs go up and down completely randomly.

Pair Corralation between Power Finance and Kilitch Drugs

Assuming the 90 days trading horizon Power Finance is expected to generate 1.03 times more return on investment than Kilitch Drugs. However, Power Finance is 1.03 times more volatile than Kilitch Drugs Limited. It trades about 0.09 of its potential returns per unit of risk. Kilitch Drugs Limited is currently generating about 0.08 per unit of risk. If you would invest  12,071  in Power Finance on December 2, 2024 and sell it today you would earn a total of  24,359  from holding Power Finance or generate 201.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Power Finance  vs.  Kilitch Drugs Limited

Power Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kilitch Drugs Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Power Finance and Kilitch Drugs

The main advantage of trading using opposite Power Finance and Kilitch Drugs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Finance position performs unexpectedly, Kilitch Drugs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kilitch Drugs will offset losses from the drop in Kilitch Drugs' long position.

The idea behind Power Finance and Kilitch Drugs Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.